The world’s leading cryptocurrency surged to $64,000 on Wednesday before swiftly retreating to $59,000, according to KRYZA data. Bitcoin’s rapid ascent came to an abrupt halt early Wednesday afternoon, with its price plummeting 7% from its $64,000 peak, resulting in significant losses for leveraged traders.

BTC had surged earlier in the day, surpassing the $60,000 mark for the first time since November 2021. After peaking at $64,037, it sharply dropped to $59,400, as indicated by the CoinDesk Bitcoin Index (XBX). Although it briefly rebounded above $61,000, another wave of selling pressure pushed it back down to near the same level. At the time of reporting, BTC was trading at $61,122.

The sell-off reverberated across the broader digital assets market, with the CoinDesk 20 Index (CD20) plummeting nearly 5% after reaching a new all-time high of 2,260 earlier on Wednesday. Major cryptocurrencies within the CD20, including ether (ETH), Solana’s SOL, XRP, Cardano’s ADA, dogecoin (DOGE), and Avalanche’s AVAX, also experienced declines ranging from 4% to 9% within an hour.

Crypto Leverage Liquidations The sudden price drop resulted in a total of $700 million in liquidations across all digital assets in the past 24 hours, as leveraged derivatives trading positions were liquidated, according to CoinGlass data.

Liquidations occur when an exchange closes a leveraged trading position due to a partial or total loss of the trader’s initial margin. This happens if the trader fails to meet margin requirements or lacks sufficient funds to maintain the trade.

Wednesday’s events likely marked the largest wipe-out since last August, when a sudden drop in bitcoin to $25,000 liquidated $1 billion worth of derivatives positions across all crypto assets. The liquidations affected both long (bullish) and short (bearish) positions as cryptocurrency prices surged and then plummeted. Record-breaking Spot Bitcoin ETF Volumes Wednesday’s volatile price action also led to record trading volumes for U.S.-listed spot bitcoin exchange-traded funds (ETFs). BlackRock’s IBIT saw $3.3 billion worth of shares traded, more than doubling Tuesday’s record-breaking volume. In total, the spot ETFs collectively recorded nearly $8 billion in trading volume, as noted by Eric Balchunas, senior ETF analyst at Bloomberg Intelligence. Meanwhile, amid the digital asset market’s turbulence, some Coinbase users were surprised to find zero balances in their exchange accounts. The company has since resolved the issue for some users.

As the much-anticipated halving event approaches, market observers view the current pre-halving period as an opportune moment for realizing short-term profits.

Bitcoin’s upward trajectory is fueled by euphoric sentiment, institutional buying interest, and the historical precedent of significant gains associated with the cryptocurrency’s halving events. Some traders are optimistic that Bitcoin (BTC) is on course to surpass its all-time highs of $69,000 by March.

The periodic halving of Bitcoin rewards, occurring approximately every four years, historically triggers bull rallies, often resulting in substantial price surges over subsequent months. The next halving is anticipated in mid-April, according to a countdown clock.

The diminishing block rewards incentivize a decrease in the supply of new Bitcoin entering the market, which, when coupled with sustained or heightened demand, typically propels prices upward. While past performance is not necessarily indicative of future outcomes, the expectation of a rally tends to encourage investors to make significant bets on the asset.

Bryan Legend, CEO of Hectic Labs, emphasized the heightened buying activity preceding halving events, driven by investor expectations of supply reduction and subsequent price increases. However, he also noted that the rally leading up to the actual halving presents an opportune moment for realizing short-term gains.

Meanwhile, other traders foresee Bitcoin surpassing its previous peak of $69,000 in March, citing robust institutional demand and the promising debut of spot bitcoin exchange-traded funds (ETFs).

Ryan Lee, chief analyst at Bitget Research, highlighted the support level at $50,000 for Bitcoin prices, anticipating fluctuations before potentially reaching historical highs in March. Lee pointed to the record trading volume of nine bitcoin ETFs in the U.S., which reached $3.2 billion the previous week, as evidence of strong bullish sentiment among institutional investors.

On Tuesday, Bitcoin ETFs collectively traded $2 billion, with BlackRock’s IBIT alone recording over $1.3 billion in daily trading volume for the second consecutive day.

Bitcoin (BTC) soared above the $59,000 mark during the early hours of Wednesday trading in Europe, marking a 5% increase over the past 24 hours and propelling its market capitalization to $1.2 trillion.

The surge in price coincided with robust activity in spot bitcoin exchange-traded funds (ETFs), which collectively amassed over $3 billion in trading volumes on Tuesday, bolstering demand. Additionally, some traders highlighted the forthcoming bitcoin halving event, slated for April, as a fresh narrative fueling a pre-halving rally.

According to Coinglass data, futures positions betting on lower bitcoin prices saw $25 million in liquidations since the start of the Asian trading session, potentially contributing to the upward pressure on prices.

In other segments of the crypto market, major tokens such as ether (ETH), Solana’s SOL, and XRP observed gains of up to 3% since the commencement of Asian trading hours, as indicated by data from CoinGecko.

Meanwhile, the fear and greed index, a sentiment gauge reflecting the pace of asset movement relative to underlying fundamentals, reached a reading of 82 on Wednesday, signaling extreme greed and hitting its highest level in over a year.

This index, graded on a scale from 0 to 100, portrays 0 as the epitome of fear and 100 as the pinnacle of greed. In a greedy environment, euphoria tends to dominate, which according to the developers of the index, suggests that the market is ripe for a correction.